Perhaps the least interesting thing about the reported decision by US President Donald Trump’s administration to allow Nvidia and AMD to export high-end semiconductors to China in exchange for 15% of the revenues is that it is probably unlawful. More important is the window it opens onto how the presidency is using its national security powers not to advance the country’s interests, but for its own, narrower ambitions.

To understand what’s at stake, consider Nvidia’s H20 chips, which Trump, when justifying his decision, described as an “old chip” that is “obsolete.” In 2024, Nvidia sold about a million of these “obsolete” H20s in China. This is about five times the number of similar chips sold by Huawei. The scale of Nvidia’s advantage suggests that H20 chips, while no longer cutting edge, remain very valuable to Chinese firms. Nvidia’s CUDA programming interface makes them easier to connect to other hardware than Huawei’s products.

Overwhelming evidence of H20 chips’ continuing relevance came in January, when the Chinese firm DeepSeek used them to develop a breakthrough large language model delivering top-of-the-line performance without the price tag of OpenAI, Anthropic, or Google models. Such semiconductors thus still play a pivotal role in the ongoing competition between China and the United States over AI, such that permitting their export undermines rather than advances US interests.

Read more at Project Syndicate